Diversified Funds

Diversified funds contain a wide array of securities to reduce the amount of risk in the fund. Actively maintaining diversification prevents events that affect one sector from affecting an entire portfolio, make large losses less likely. It is also known as multi cap funds.

Risk involved

Diversified equity funds invest across market capitalizations and sectors. Such active diversification ensures the negative performance of one sector does not affect the entire portfolio and increases the possibility of making a sustainable return. These funds aim for medium to long term capital appreciation and suitable for investors having moderate risk profile and investment horizon of at least 3 years.

Returns One Can Expect

On an average of all the diversified funds available following are the returns as on 31.05.2017 :-

Tax Laws on Diversified Funds

Returns from an equity mutual fund are treated as long term capital gains if investments are held for more than a year. Such returns are completely exempt from income tax according to the current laws. However, if investments are held for one year or less, the returns are taxed under short term capital gains. Such returns are taxed at 15 per cent.

How Much Can One Invest?

There is no such criteria and you can invest according to your will. One can start systematic monthly investment with as low as Rs. 500 in most funds though some mutual funds have higher minimum investment criteria.